As a Northern Virginia home buyer, it’s essential to learn what to expect from a home appraisal, as this is one of the most important phases in a real estate transaction. After all, it is one of the major steps in getting approved for your home loan.
To ensure their financial safety in the event the loan is defaulted on, a bank never approves a loan for more than the home appraises for. This means that if a home doesn’t appraise, the seller must agree to lower the selling price or you have to walk away from the home purchase.
While you do have the option of making up the difference in cash, this generally isn’t a great option, because you will be paying more than the home is worth.
What to Expect From a Home Appraisal – Understanding the Process
A home appraisal in Northern Virginia is performed by a licensed, third party certified professional appraiser. Although it is ordered by the lender, the buyer is responsible for the costs. On average, an appraisal costs between $300 and $500, though the price is usually higher with more complex properties, such as a multi-unit property. In most cases, the cost is added to the closing costs, unless the sale falls through.
The appraiser will perform a complete inspection of the exterior and interior of the home. He or she will address:
- The condition and size of the home and other permanent fixtures, such as a detached garage. If improvements have been made, they will note them, as well as what materials were used.
- Comparable sales in your neighborhood. To do this, he or she will look for similar homes that have sold in the past six months. They will also look at the asking price of similar homes for sale in the area.
- The surrounding area, including whether it is an established area or new development.
It is important to understand what to expect from a home appraisal written report, in the sense that it is drastically different from a home inspection report. An appraiser will note obvious property condition issues, but they by no means do a thorough inspection of the home to verify the safety of the property or to determine if it is up to code. They are concerned first and foremost with the fair market value of the property.
What to Expect From a Home Appraisal After the Inspection is Completed
After taking into consideration all of the information he or she has obtained, the appraiser will create a report for the lender that includes the opinion of value for the home, as well as a detailed explanation of how they arrived at this number.
Do You Know What to Expect From a Home Appraisal Coming In Too Low?
First, it is important to understand why exactly the appraisal was low. The house is most likely overpriced, and the report simply shows that there’s not enough surrounding comparable sales activity to justify the higher price of the sales contract. If so, you might be able to negotiate with the owner to lower the contract sales price. You may also opt to contact the lender to dispute the appraisal amount, but unless you have a strong case that the amount is wrong, it is unlikely the value will be changed.
Have you had a challenging experience with a home appraisal? I'd love to hear about it in the comments section below!